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Circular No. 35 F E D E R A L R E S E R V E B A N K Series of 1921 OF DALLAS May 27, 1921. S U P R E M E C O U R T D E C IS IO N IN P A R C L E A R IN G SUIT TO THE BANK. ADDRESSED: The decision of the Supreme Court of the United States in the case of the American Bank and Trust Company, et al. vs. the Federal Reserve Bank of Atlanta, Georgia, et al., upholds the Federal Reserve Bank’s contention that the matter in volved is within the jurisdiction of the United States District Court, but denies the Federal Reserve Bank’s motion to dismiss plaintiff’s complaint. The decision does not deny the legal authority of Federal Reserve Banks to collect checks on nonmember banks by making presentation thereof at the bank’s counters, but holds merely that the nonmember banks may be entitled to relief if they can prove Federal Reserve Banks’ intent to accumulate checks for presenta tion for the sole purpose of injuring banks upon which checks are drawn. The Supreme Court said: “ The question at this stage is not what the plaintiffs may be able to prove or what may be the reasonable interpretation of the defendants’ acts, but whether the plaintiffs have shown a ground for relief, if they can prove what they allege.” The United States Supreme Court’s decision will not interfere with the present check clearing functions of Federal Reserve Banks, which can continue as hereto fore in the collection of checks drawn upon those banks which are listed upon the Federal Reserve Banks’ par list. It has never been the policy or practice of the Federal Reserve Bank of Dallas to accumulate checks of nonmember bank s, but on the contrary it has been, and will continue to be, our policy to forward, by mail, on date of receipt, checks of non member banks either to a member bank in the same town or directly to the non member bank on which drawn, unless such nonmember bank, (1) has refused to remit at par for its own items; (2) has failed to remit promptly in acceptable ex change for its own items; or (3) is in such an unsatisfactory conditions as to make it undesirable to send the items directly to it. However, we are compelled to col lect items drawn on nonmember banks through agencies other than the mails, when conditions similar to those recited above make it necessary, in order that our inter ests as well as those of our endorsers may be properly protected. THE FEDERAL RESERVE BANK CANNOT PAY EXCHANGE TO ANY MEMBER OR NONMEMBER BANK FOR REMITTING FOR CHECKS WHICH ARE DRAWN UPON THEM. Respectfully, Governor. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)